Thursday, November 12, 2015

AIM-listed Rotherham company, Xeros, is set to raise a further £40m from a share placing to maintain momentum and accelerate the roll out strategy of its commercial laundry business in the Americas and Europe.

Based on the Advanced Manufacturing Park (AMP), Xeros is a Leeds University spin-out that has developed a patented system using a unique method of special polymer beads rather than the usual large amounts of fresh water to clean clothes.

Admitted to AIM in 2014, Xeros is commercialising the system which uses at least 70% less water, up to 50% less energy and approximately 50% less detergent. Announcing its results in the the year to July 31 2015, the firm said it had made significant progress in commercial laundry, the first market in which it chose to commercialise the bead technology.

It is the billion dollar US laundry market that is the major target for Xeros and 103 machines installed at US customers' premises - up from 37 last year - with commitments to install a further 39. In addition, there were a further 20 machines installed with European customers with further commitments to install of 15. In the US, 46% of sales of machines have been from repeat or affiliated buyers and seven out of the 10 largest hotel chains are now customers.

Earned income was up 52% to £480,000 from £315,000 in the 2014 financial year. Xeros estimated that as at July 31 2015, contracted future revenues were £1.6m. A pretax loss of £10.7m, widening from 6.7m, was expected as the company continues to invest in new technology as well as the roll-out of the laundry business.

Newly appointed chief executive officer of Xeros, Mark Nichols, said: "In the short term, we are focusing on driving our commercial laundry business to meet the growing demand, particularly in the US, for our energy and water efficient solutions with superior cleaning performance. This is providing us with increasing forward visibility on revenues. As at 31 July 2015, contracted future revenues amount to £1.6m up from £0.8m.

"In the medium term, we plan to capitalise on the excellent progress we continue to make with our application in leather processing. We are also developing the opportunity in the global domestic laundry market.

"In the longer term, we have the opportunity to commercialise a number of further applications in parallel.

"The fundraising announced today will support the execution of our strategies over these horizons. We look forward to the future with confidence."

The use of the beads in leather processing and domestic laundry are currently being developed actively for commercialisation and additional attractive applications, include garment finishing, are in the process of reviewing for inclusion in Xeros' development pipeline.

As the company looks at how to bring its systems into the home, discussions continue with major machine manufacturers on three continents as it determine a suitable route and business model through which to generate an appropriate return its intellectual property.

The proposed share placing of new Ordinary Shares at a price of 225p per share is expected to raise approximately £40m. The share price of Xeros has risen from 130p on admission in March 2014.